A revocable living trust is put in place through a declaration appointing a specific trustee, who will be managing and administering the grantor’s personal property. Note that a trusted company, a bank, or even grantors themselves can be appointed as trustees.
After setting up the revocable trust, estate assets are placed into it. Often included are real property, a bank account, or investments, which are no longer ‘owned’ by the person who put up the said estate plan. Such estate planning documents specify how property in trust shall be managed when you die. Drafting these are also useful after death (yours or that of a loved one) because assets of the deceased person that are owned by the trust, and not by the decedent, need not be brought to court and probated.
Furthermore, given the revocable nature of this legal document, it can be amended and you still have control over trust property. Income from trust assets, though taxable, will remain yours throughout the remainder of your lifetime. None is transferred to any beneficiary of a trust (who you decided to appoint, be it a surviving spouse or would-be heirs) until you are deceased.
Before proceeding, it might be helpful to know how a living trust will be advantageous for your surviving spouse, children, or even grandchildren. Setting up a trust, as in above, is helpful when avoiding probate. In addition to this, your trust beneficiaries will benefit from the flexibility and privacy protection it offers.
- The probate process for transferring property requires several estate planning documents to be submitted to the probate court. Revocable trusts enable you to avoid this, thus helping minimize probate costs and the stress that comes with such proceedings.
- Under relevant trust law, a living trust you create may be revoked or amended, at your discretion, essentially anytime during your lifetime. As would be explained to you by your estate planning lawyer, such a trust is generally flexible and changeable.
- A revocable trust is also an ideal choice for those seeking protection of privacy. Those who wish to keep private the information and records on probate estate often benefit from this. When wills are probated, almost any legal document involved becomes part of public records.
- A standard last will and testament could lead to disputes among heirs you appoint. A family member, for example, could contest your last will and testament by using a supposed lack of testamentary capacity as grounds. When you create a trust, you could specifically disinherit any individual posting a challenge to your death wishes.
- A married couple often chooses to establish a trust if they have a substantial property that they acquired before they were married. Trust documents are often used when segregating these assets from those considered as community property.
- A person also often creates a trust to be able to decide on guardianship while he or she is still alive. Aside from naming the actual guardian, it can specifically be used in controlling the spending habits of your minor children’s guardian. A revocable living trust could also give authority to another individual to make decisions for you if you become disabled or incapacitated. A trustee could be appointed as the one who may manage financial affairs without having to obtain a durable power of attorney.
- While a trust is not, in itself, a good estate planning tool if your priority is minimizing estate taxes, provisions in the trust can allow for a transfer of wealth through a credit shelter trust that is established upon death. Setting up a credit shelter trust effectively reduces what is taxed for estates that go beyond estate tax exclusions.
- When you set up a trust, whatever wealth you have accumulated can continuously grow for several generations. This can be done by getting a professional trustee who will manage your trust estate. Withdrawals can be limited to only income unless requirements stated in emergency provisions are met.
For questions on a revocable or irrevocable living trust, the different types of trusts, or asset protection in the context of these, consult with a professional from a reliable law firm in California. Talk to us at Moschetti Law and consult with a competent estate planning attorney. Call 888-664-1848 for more information.